Does Kidokinetics provide any material benefits to franchisees for using designated or approved suppliers?
Kidokinetics Franchise · 2024 FDDAnswer from 2024 FDD Document
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We do not provide material benefits to you (such as renewal rights or the right to open additional Kidokinetics Businesses) based on whether or not you purchase through the sources we designate or approve; however, purchases of unapproved products or from unapproved suppliers in violation of the Franchise Agreement will entitle us to, among other things, terminate the Franchise Agreement. We and our affiliates may receive rebates from some suppliers based on your purchase of products and services and we have no obligation to pass them on to our franchisees or use them in any particular manner.
During the fiscal year ended December 31, 2023, we derived $511,370 in revenue from required franchisee purchases in the form of sales from shirts and other apparel. This represents 14.5% of our total revenue of $
Source: Item 8 — RESTRICTIONS ON SOURCES OF PRODUCTS AND SERVICES (FDD pages 22–24)
What This Means (2024 FDD)
According to Kidokinetics's 2024 Franchise Disclosure Document, Kidokinetics does not provide material benefits to franchisees for using designated or approved suppliers. However, franchisees are required to purchase or lease certain products, services, supplies, equipment, and computer hardware and software from designees, approved suppliers, or directly from Kidokinetics or its affiliates. Failure to comply with these requirements and purchasing from unapproved sources can result in the termination of the Franchise Agreement.
Kidokinetics may negotiate purchase arrangements with suppliers for the benefit of franchisees and the System and may receive rebates or volume discounts. Kidokinetics and its affiliates may also receive rebates from suppliers based on franchisee purchases, without obligation to pass these on to franchisees. During the fiscal year ended December 31, 2023, Kidokinetics derived $511,370 in revenue from required franchisee purchases in the form of sales from shirts and other apparel, representing 14.5% of its total revenue of $3,509,206.
Franchisees are required to use designated computer hardware and software, including a point-of-sale system, and obtain related services from specified suppliers. They must also maintain required insurance coverage from an insurance company approved by Kidokinetics, with minimum coverage amounts specified in the Franchise Agreement, such as comprehensive general liability insurance of at least $1,000,000 per occurrence and $2,000,000 in the aggregate. The insurance company must be rated "A" or better by A.M. Best & Company, Inc.
Kidokinetics estimates that 30% to 80% of a franchisee's initial expenditures and 25% to 30% of ongoing expenditures will be from approved suppliers or under Kidokinetics' specifications. While Kidokinetics does not offer material benefits for using approved suppliers, non-compliance can lead to termination of the franchise agreement. Franchisees must also pay a Software License Fee of $3,000 prior to opening for the KIDOLINK software.